Which of the following journal entries is correct when common stock is initially issued for cash at a price in excess of the stock's stated value?

Question

Quizplus · Accepted Answer

When common stock is initially issued for cash at a price in excess of the stock's stated value, the amount received in excess of the stated value is recorded in the additional paid-in capital account. In option B, the common stock is credited for its stated value ($10,000), and the additional paid-in capital account is credited for the excess amount received ($90,000). This results in a total credit of $100,000, which is equal to the amount received for the common stock issuance.

Which of the Following Journal Entries Is Correct When Common